Correlation Between Canadian Utilities and United Internet
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and United Internet at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Canadian Utilities and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and United Internet AG, you can compare the effects of market volatilities on Canadian Utilities and United Internet and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Canadian Utilities with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and United Internet.
Diversification Opportunities for Canadian Utilities and United Internet
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and United is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG and Canadian Utilities is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Canadian Utilities Limited are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and United Internet go up and down completely randomly.
Pair Corralation between Canadian Utilities and United Internet
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 0.87 times more return on investment than United Internet. However, Canadian Utilities Limited is 1.15 times less risky than United Internet. It trades about 0.04 of its potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of risk. If you would invest 2,286 in Canadian Utilities Limited on October 16, 2024 and sell it today you would earn a total of 33.00 from holding Canadian Utilities Limited or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. United Internet AG
Performance |
| Timeline |
| Canadian Utilities |
| United Internet AG |
Canadian Utilities and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and United Internet
The main advantage of trading using opposite Canadian Utilities and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, United Internet can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Internet will offset losses from the drop in United Internet's long position.| Canadian Utilities vs. APPLIED MATERIALS | Canadian Utilities vs. SOCKET MOBILE NEW | Canadian Utilities vs. Hyster Yale Materials Handling | Canadian Utilities vs. Goodyear Tire Rubber |
| United Internet vs. De Grey Mining | United Internet vs. Canadian Utilities Limited | United Internet vs. United Utilities Group | United Internet vs. Harmony Gold Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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